Green Loans Research Articles

Bank-firm common ownership, green credit and enterprise green technology innovation: Evidence from Chinese credit markets

Bank-firm common ownership can tackle the innovation dilemma of bank loans on firms' green development. This paper constructs indicators of common ownership and green technological innovation and then investigates the impact of bank-firm common ownership on corporates' green technological innovation using Chinese A-share listed enterprises samples from 2004 to 2021. Our conducted experiments reveal that bank-firm common ownership shareholders not only make banks and lending firms have the same goal, promote the total level, quantity, and quality of technological innovation for the green development of lending firms, and profit from the firms' short- and long-term market responses. Our findings are prominent in private enterprises, small-capitalization enterprises, and bull market cycles. In addition, we discover that shareholder reduction restrictions and policies restricting corporate shareholding in financial institutions enhance bank-firm common ownership shareholders on corporate green technological innovation development. Common ownership shareholders reduce information asymmetry between banks and lending enterprises and provide green loans to support enterprise green technology innovations. Furthermore, alleviating financing constraints and strengthening the supervisory role are important influence mechanisms. In this regard, carried PSE analysis indicates the direct effect of bank-firm common ownership shareholders to promote enterprise green development of technological innovation accounts for about 14 % of the total effect, the intermediary effect of “financing mechanism” and “supervision mechanism” account for about 82 % and 4 %, and the “financing mechanism” is more important than the “supervision mechanism.” The findings of this paper can optimize the credit market to serve the green and high-quality development of Chinese enterprises better.

Driving SMES towards Green Business: The Impact of Sustainable Marketing Mix on Performance and Loyalty in BNI'S Go Green Movement

Growing global concerns over environmental issues, such as climate change and pollution, have heightened the demand for sustainable business practices, particularly in the banking sector. Financial institutions support environmental sustainability through green finance by offering eco-friendly products like green loans and bonds. This study examines how BNI's Go-Green initiative enhances SME customer loyalty by incorporating the sustainable marketing mix, focusing on people, profit, and planet. A quantitative approach was used to assess the impact of the sustainable marketing mix on SME performance and customer loyalty within BNI's Go Green movement in Bukittinggi, Indonesia. A stratified random sample of 303 SMEs was selected from a population of 1,239. Data were gathered through structured questionnaires using a five-point Likert scale and analyzed using Structural Equation Modeling-Partial Least Squares (SEM-PLS). Confirmatory Factor Analysis (CFA) validated the measurement model, and the structural model assessed direct and indirect effects. The variable had the highest Average Variance Extracted (AVE) 0.873. Discriminant validity showed a strong correlation between business sustainability and customer loyalty (0.768). Place and Business Sustainability had significant positive effects on customer loyalty, while People and Planet had more limited impacts. This study introduces the expanded marketing mix people, profit, and planet into the green finance framework and highlights the underexplored mediating role of business sustainability in fostering SME customer loyalty. The findings emphasize the importance of aligning green banking products with SME needs to enhance loyalty and support global sustainability goals, including the United Nations’ Sustainable Development Goals (SDGs).

Unveiling the drivers of green loan disclosures: a study of financial and governance determinants

PurposeThis study aims to investigate the factors influencing Indian banks’ choice of green loan disclosure practices. The study analyzes the effect of financial and governance variables to understand the sustainable reporting (through green lending) behavior of Indian banks.Design/methodology/approachThe data on green loan disclosure has been hand-collected from the annual reports using a content analysis approach. Using the data of 26 banks for 12 years (2012–2023), the study uses the panel regression method to control for cross-sectional heterogeneity and generalized methods of the moment to address potential endogeneity issues.FindingsThe empirical results depict that larger banks with sufficient risk capital and a strong corporate governance framework demonstrate greater disclosure of green loans. However, growth opportunities and higher market value impedes the reporting of green lending.Research limitations/implicationsThe findings of the study will enhance the extant literature on sustainability disclosure by integrating the financial sector companies in the context of an emerging economy. However, future research may include nonbanking finance companies as well.Social implicationsBanks use societal deposits to invest in productive avenues, and therefore, it is paramount to understand their social and environmental consciousness while evaluating a financing proposal. This research provides a thorough understanding of the sustainable reporting of banks through the lens of green lending.Originality/valueThis research provides unique evidence on the bank-specific determinants of green loan disclosure in an emerging economy context as against the extant literature which primarily focused on sustainable reporting of nonfinancial companies.

Inquisitive exploration of green finance, social finance, and capital formation in shaping economic development: insights from BRICS Countries

The significance of democratic commitment is highlighted on a global scale by the importance placed on offering a multitude of chances to establish enduring ecosystems and foster economic progress. Social finance, capital formation, and green finance have recently received a lot of attention from this perspective. Past studies mainly examined social finance and green finance in isolation. When investigating the individual impact of these important variables on economic growth in the occurrence of important events like the COVID-19 pandemic and other environmental pollution issues, most studies have mainly focused on developed countries, ultimately ignoring the different dynamics in emerging economies. The purpose of the research is to investigate the joint interaction between social finance (Social Impact Bonds), capital formation, and green finance (green loans, green investments, and green security) on economic development in BRICS economies. This research employed a longitudinal dataset from 2013 to 2023. The generalized method of moments (GMM) and fixed effect model (FEM) were employed in this research as statistical techniques for estimating parameters. The findings of this study revealed a positive joint relationship between green finance, capital formation, and social financing on economic development of BRICS economies. Therefore, measures that jointly promote social and green finance amidst environmental challenges or economic risks could present opportunities to mitigate the vulnerability of a country's economic prosperity. This research will surely guide policymakers in developing economies on how to give considerable attention to sustainable aspects while formulating policies and strategies aimed at economic development.

Leveraging Green Finance to Improve SME Sustainability in Nigeria

This research investigates the impact of various dimensions of green finance on the environmental performance of SMEs, focusing on selected manufacturing SMEs in Lagos, Nigeria. Two hundred and fifty surveys were distributed to the designated participants, resulting in the successful collection of 235 completed questionnaires. The data analysis utilized both the Pearson Product Moment Correlation Coefficient (PPMCC) and Path Analysis-Structural Equation Modeling (PA-SEM). The findings indicate a positive association between green investment and green training with SME environmental performance, although the correlation is not statistically significant. This suggests that while green investment and training show potential for enhancing SMEs' environmental performance, further exploration is needed. Conversely, the study confirms a positive and significant relationship between green loans, green technology, and SME environmental performance, highlighting the effectiveness of green loans and technology in promoting environmental responsibility among SMEs. In light of these results, it is recommended that governmental bodies, financial institutions, and other stakeholders provide financial incentives and support to SMEs for the adoption of green technology and green loans. Additionally, a collaborative effort is encouraged to actively promote green training initiatives for SME employees. This collective approach aims to cultivate a sustainable and environmentally conscious business environment, aligning with the overarching objectives of environmental sustainability.

Mapping the landscape of green banking strategies: a bibliometric approach

IntroductionGreen banking (GB) strategies are a set of financial practices and activities implemented by banks to encourage sustainability, environmental responsibility, and low-carbon impact. This bibliometric study examines the present state of research in this field by utilizing the Scopus database for data retrieval and VosViewer for network analysis.MethodA total of 149 researches were retrieved from the Scopus and analyzed using the VosViewer software following the PRISMA guidelines. The study examines year-by-year publication patterns, top-cited articles, contributing countries, journals, co-citation analysis of authors, and co-occurrence analysis of keywords.ResultStrategies such as online banking, solar ATMs, construction of green buildings, and making provisions for green loans are identified as the key GB strategies that can be adopted by the banks. Furthermore, the fundamental challenges banking organizations encounter while implementing GB strategies are underlined.DiscussionThe study suggests that “green brand image,” “green audit,” “environmental economics,” and “carbon footprint” can be considered as an area of interest in future. The study provides researchers, policymakers, regulators, and financial institutions with valuable insights by presenting the current state of green banking research and identifying emerging areas for further exploration. These findings will help others to discover the areas of interest in GB and advancing sustainable finance practices that can foster environmental responsibility in the financial sector.

Sustainable education index and copper trade interconnections

The trend in copper trade raises significant concerns regarding global mineral resource sustainability. This study investigates how sustainable education impacts copper trade in China, analyzing data from 1990 to 2021. Findings reveal that a 1% increase in the Sustainable Development Index leads to a reduction in copper trade: exports decrease by 0.14%–0.27% and imports by 0.35%–0.57%, highlighting the negative influence of sustainable education on trade. GDP growth positively affects copper trade, while the official exchange rate impacts exports and imports differently due to currency fluctuations. Urbanization boosts both exports and imports, driven by infrastructure expansion. Additionally, loans to the private sector specifically enhance copper imports. To foster sustainable copper trade, China should invest in sustainable education, promote gender equality in education, encourage green economic growth, implement an effective carbon tax, and provide green loans for the copper sector.

Business Model and Strategy for Sustainable Lending of State-Owned Banks in Indonesia

Currently, banks are facing challenges in fulfilling the interests of stakeholders, not only from an economic point of view, but also in terms of environmental, social, and governance (ESG) aspects. This is due to the increasing concern for sustainability issues, including lending activities. Lending activities constitute the largest portion of bank assets and are the largest contributor to bank revenues. Thus, banks need certain business models and strategies to encourage sustainable lending growth; otherwise, it will be difficult for banks to fulfill stakeholder’s interests and support sustainable development goals. This study aimed to build a sustainable business model and select sustainable lending strategies in state-owned banks in Indonesia using a value chain approach. The development of a sustainable business model utilizing a triple-layer business model canvas (TLBMC) is based on the results of previous research and sustainability report data of the three state-owned banks. The formulation of strategy selection as the key driver of sustainable lending utilized the analytical hierarchy process (AHP) based on expert respondent data collected through questionnaires. This research showed that the lending distribution business model at state-owned banks in Indonesia, which was built using the TLBMC framework, can realize sustainability goals in the form of a sustainable lending business model. Furthermore, this sustainable business model can be used as a basis for selecting sustainable strategies. In addition, the AHP results yielded alternative strategies in the form of the market development and penetration of green loans and micro, small, and medium enterprises (MSMEs) as the key drivers of sustainable lending growth.

Attracting Private Investment to Renewable Energy Projects in India

Attracting private investments to renewable energy projects is a topic of significant debate within academic circles. This study investigates the relationship between green fiscal policy and green monetary policy concerning investments in renewable energy in India, spanning from 1990 to 2021, employing the ARDL (Autoregressive Distributed Lag) technique. The findings reveal that green taxes can positively or negatively impact investments in renewable energy sources. Furthermore, green monetary policy, mainly through the provision of green loans, accelerates investment inflows into renewable energy sources in the short and long terms. Challenges hindering private investment in India's renewable energy sector include compounded risk and inflation. Nonetheless, financial development and literacy rates are crucial in expanding investment in renewable energy sources. Based on these findings, practical policy recommendations for India entail enhancing sustainable literacy through green education, promoting social inclusivity, and establishing effective monetary and fiscal policies.

Quistclose trusts and green projects

Abstract This article analyses the relevance of Quistclose trusts in a situation in which lenders make green finance available to borrowers for environmentally sound and sustainable projects. This examination highlights how a transaction can be structured to increase the likelihood of such a trust being recognised. This article will also consider green loans (as defined by the Loan Market Association) since these loans have characteristics that can indicate the presence of a Quistclose trust. Beyond the practical aspects of creating a trust, the article explores whether a Quistclose trust can be useful when money is lent for green projects. It is possible to question if Quistclose trusts can motivate borrowers to be more conscious of how they use the loan money. In particular, the article discusses whether the fiduciary duty regarding the use of the funds can strengthen the integrity of certain loans.

Big data, green loans and energy efficiency

Green digital finance is an instrumental way to promote technological innovation, accelerate the low-carbon transition, and foster sustainable development. With the emergence of green digital finance, how does it affect firms’ energy use efficiency? Using big data and green loans as an entry point, the impact of green digital finance on corporate energy efficiency and the role of big data are examined. We provided a simple theoretical model to analyze the green loaning behavior of the banking sector after applying big data and its impact on corporate energy efficiency. Our research finds that: (1) The application of big data can make it easier for the banking sector to obtain loan companies’ information and reduce loan delinquency rates. This will reduce the information and transaction costs of the banking sector and expand the scale of optimal green loans. (2) The optimal green loan scale has a negative relationship with the optimal green loan interest rate. (3) The application of green loans by firms can improve energy efficiency and have a range of impacts on firms’ decision-making, including an increase in the emission reduction ratio, innovation probability, output, and profit, followed by a decrease in energy consumption and pollution emissions. This paper further clarifies the channels through which green digital finance affects energy efficiency and specifies the role of big data in green digital finance. This could help relevant policymakers design more effective green digital finance policies, contributing to carbon peaking and carbon neutrality goals.

The impact of green finance and technology on the commercial banks’ profit and risk

This paper investigates the impact of green credit on the performance and risk of Chinese commercial banks, and also explores the impact of green technology on this mechanism. The results show that for all banks, green loan balances have a significantly negative impact on net profit. While for large, small and medium sized banks, it also reduces and increases bank insolvency risk respectively. Therefore, our findings suggest that the standard mechanism for measuring the benefits of green credit should be improved and the regulatory mechanism for green credit should be strengthened.

SUSTAINABLE FINANCE IN ACTION: EXPLORING GREEN LOANS IN PROMOTING ENVIRONMENTAL RESPONSIBILITY

In the evolving landscape of finance, the imperative to address environmental concerns and promote sustainable development has given rise to innovative financial instruments, notably green loans and sustainable linked loans. This comprehensive study delves into the key features and characteristics of green loans, assessing their role in fostering positive environmental impact through targeted funding for eco-friendly projects. Additionally, it explores the novel concept of sustainable linked loans, which tie loan terms to specific sustainability performance targets, offering a nuanced approach to promoting environmental and social sustainability. The research examines adoption patterns globally, evaluates the impact of Green Loan Principles (GLP), analyzes financial incentives, and explores the alignment of these financial instruments with Sustainable Development Goals (SDGs). The findings contribute to a deeper understanding of the dynamics surrounding green loans and sustainable linked loans, shedding light on their effectiveness in driving positive change towards a sustainable global economy.

Social enterprise, renewable energy, and cap-and-trade under sustainable insurance

Social entrepreneurship encompasses entrepreneurial activities designed to tackle societal and environmental challenges. This paper introduces a capped call option model for sustainable insurance within the context of financing social enterprise green operations, emphasizing the adoption of renewable energy and the implementation of cap-and-trade mechanisms. Our focus is on an objective defined as a combined stakeholder equity function, reflecting sustainable insurance resulting from the social enterprise's green operations and stakeholder engagement to fulfill the goals of social entrepreneurship. The research reveals that increasing subsidies for the social enterprise embracing renewable energy enhances stakeholder equity and social enterprise equity while negatively impacting insurer equity. Additionally, as the social enterprise integrates advanced green technologies into production, the positive effect on stakeholder equity becomes more pronounced. Stringent regulatory caps, however, adversely affect both stakeholder equity and social enterprise equity. Moreover, the study highlights green loan subsidies as a mutually beneficial strategy, fostering positive outcomes for both the borrowing social enterprise and the fund-providing insurer. It emphasizes the need for policies prioritizing green subsidies to promote the adoption of renewable energy for enhanced equity under sustainable insurance.

Research on Green Finance Supporting Green and Sustainable Development of Railway Enterprises

In the process of rapid industrialization and urbanization in China, there is a strong demand for energy, while carbon emissions have not yet reached their peak. As an important market-incentivized environmental policy tool, green finance plays an increasingly important role in the process of carbon neutrality. The railway is the backbone of the transportation system, and a complete green finance application model has not yet been formed in its green development process. This article focuses on the impact of green finance on railway enterprises, analyzes the challenges and necessity faced by the development of green finance in railway. It also explores the green and sustainable development methods of railway enterprises, analyzes the application of green financial tools in enterprises, and proposes exploration and expansion suggestions from the development path and mechanism of green finance in railway enterprises. The study has shown that the main sources of green funds for railway construction come from green loans and green bonds. The construction of a green transformation plan takes green funds as an important innovative financing method. In the railway industry, enterprises innovate and develop financial service supply side reforms through green insurance and green leasing, and apply carbon trading and related financial derivatives to obtain green development benefits. Carrying out green finance in the railway industry can optimize financing structure, broaden financing channels, reduce the overall financing costs, and guide funds to clean, science and technology and other key areas, which is of great significance to support the high-quality development and green upgrading of the railway enterprises.

Energy transition and housing market bubbles: Evidence from prefecture cities in China

Governments are committing to realizing the energy transition to create a sustainable and resilient energy future, while less is known about the real effects of the energy transition on various sectors of the economy, particularly the tertiary industry. This paper thus investigates the relationship between the energy transition and housing market bubbles at the level of prefecture cities in China. We find that an increase in one standard deviation of the energy transition decreases approximately 39% of the average housing bubbles index. Furthermore, the digital economy and land transfer income of real estate enterprises could be underlying economic channels to significantly explain the impacts of the energy transition on housing market bubbles. Finally, we identify that green finance including green loans and green bonds enhances this negative effect on housing market bubbles. Our main result remains valid in a battery of robustness tests. This study provides important practical implications for policy makers, enterprises, and investors.

Impact of Green Finance on Environmental Performance with the Mediation of Financial Innovation: Evidence from Nigerian Bank

Objective: This study examines the mediating effect of financial innovation on the relationship between green finance and environmental performance. Design/Methods/Approach: A targeted sampling technique was used for access bank selection. Copies of the structured questionnaire were sent to 250 branch managers of Access Bank in southwestern Nigeria. A total of 200 questionnaires were completed and returned to researchers. Data were analyzed using the STATA 15 version using structural equation modeling. Findings: The results show that green loans, green training, green investment, and green policy have a positive and significant impact on environmental performance. This means that green finance parameters are the driving force behind Nigeria's environmental initiatives and performance. Furthermore, the study showcases that financial innovation partially mediates green loans, green investments, green training, and environmental performance. The study also confirms that financial innovation does mediate green policy and environmental performance. Originality/Value: Prior studies have confirmed the correlation between green finance and environmental outcomes. However, despite various research endeavors highlighting the influence of green finance on overall ecological performance and introducing financial innovation as a mediator, this aspect remains unexplored in the context of the banking sector. Practical/Policy implication: Given that financial innovation partially mediates green loans, green investments, green training, and environmental performance, the results of this investigation are of importance to policymakers and financial institutions in the area of banks’ environmental performance. This study provides insights on financial innovation and green finance in financial institutions to foster green banking activities to promote environmental sustainability and performance.

Green finance when stakeholders’ interests collide with each other: the case of Bangladesh

PurposeThis study examines the impact of chief executive officer (CEO) power, institutional investors and their interaction on green financing provided by Bangladeshi financial institutions and the moderating effect of government policy and CEO political connections on these relations.Design/methodology/approachWe employ ordinary least squares (OLS) regressions and interaction terms among variables of interest for the empirical analysis.FindingsGreen financing decreases with CEO power, implying that CEOs of this country’s financial institutions are averse to green loans, whereas institutional investors increase green financing extended by these institutions. The government policy, which includes financial incentives for complying financial institutions, strengthens institutional investors' positive impact on green financing, but it does not change CEOs' aversion to green loans. Institutional investors have a positive moderating effect on the relationship between green finance (GF) and CEO power, but this positive moderating effect is negated in banks where the government owns a stake, possibly because CEOs of state-owned financial institutions are politically connected, which reduces institutional investors’ influence over them.Originality/valueThis study is unique in that it is the first to examine how the interaction among different stakeholders affects green financing in a unique setting. As the literature is almost silent on this topic, the findings of this paper are expected to raise policymakers’ awareness of the obstacles that hamper the efforts of developing countries to go green.

GREEN FINANCE: THEORETICAL ASPECT AND FEATURES OF FUNCTIONING IN UKRAINE

The article analyzes the concept of "green finance", which is the concept and practice of financial instruments and resources aimed at supporting projects and initiatives that promote environmental sustainability, as well as social and economic well-being. It can cover a wide variety of financial products, from loans and investments to debt and insurance, aimed at reducing the impact of human activities on the environment. The main idea is to promote sustainable development, preserve natural resources and improve the quality of life, while ensuring economic development. The main components of the green finance structure are identified: green bonds, green loans and credits, specialized insurance services, green investment funds, financing of green startups, etc. Green loans and credits issued by banks promote energy saving projects and the use of renewable energy sources. Green bonds issued by governments and companies attract investments for environmental initiatives. Investment funds focused on green technologies and sustainable construction are characterized by specialization. Socially responsible investments include sustainability and environmental responsibility criteria. Specialized insurance products cover risks associated with climate change. Green startup financing supports the development of innovative environmental technologies. This diversity reflects the growing interest in sustainability and environmental finance. Based on the analysis, the importance of theoretical substantiation of the concept of green finance in the context of Ukraine's European integration processes is proved. Strategies for overcoming the difficulties associated with the application of green finance in Ukraine are proposed. As for the strategies to overcome the difficulties, it is important to develop common standards and definitions for green finance, which will help to unify the understanding and application of this concept. In addition, engaging government agencies and international institutions to create a favorable legislative and regulatory environment is an important aspect. Financial barriers can be reduced through the development of incentives, subsidies, and other instruments aimed at green investments. Finally, it is important to promote education and awareness campaigns to raise awareness of the benefits and opportunities of green finance among all stakeholders.

On the interactive effects of climate policies: Insights from a stock-flow consistent model

Climate policies such as carbon tax and green finance policy are critical measures to promote low-carbon transition worldwide. These policies are, however, likely to interact with each other and create unintentional consequences. This paper adopts a stock-flow consistent model to theoretically explore the effects of policy interactions. Specifically, commercial banks, as the key credit creators and critical players in providing source of finance, are included. Based on the numerical simulations of the dynamic model, we find that both carbon tax and green finance policies render positive impacts on low-carbon transition. In addition, green credit incentives, if imposed simultaneously with carbon tax, can enhance the positive effects. Although low-carbon transition could generate higher net government revenues, our results show that banking sector tends to expose to higher financial risks when firms’ debt-equity ratio rises. Further analysis shows that subsidies on green loans can support green transition and bring positive consequences to debt rollover and social welfare, indicating the needs for active government intervention to improve policy effectiveness. The framework proposed in this paper provides a useful way to understand policy dilemmas in pursuing low-carbon transition and give important implications to form optimal policy mix.